In Japan, After Years of Falling Prices,
Fears of a Faster-Than-Expected Inflation Arise

By

Yuka Hayashi

Updated July 24, 2006 12:01 a.m. ET

For most of the past decade, Japan's biggest economic problem has been falling prices that put a brake on business activity. Even though consumer prices started rising last year, and the government last week removed the word "deflation" from a key part of its monthly economic report for the first time in five years, prices at the retail level are barely budging. The Japanese central bank is forecasting year-to-year increases of just 0.8% through the end of next year.